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What Drives Financing Decisions of SMEs? A Survey of German Bank Advisers

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Goeck, M., Walther, U. What Drives Financing Decisions of SMEs? A Survey of German Bank Advisers. Credit and Capital Markets – Kredit und Kapital, 55(1), 67-97. https://doi.org/10.3790/ccm.55.1.67
Goeck, Marco and Walther, Ursula "What Drives Financing Decisions of SMEs? A Survey of German Bank Advisers" Credit and Capital Markets – Kredit und Kapital 55.1, 2022, 67-97. https://doi.org/10.3790/ccm.55.1.67
Goeck, Marco/Walther, Ursula (2022): What Drives Financing Decisions of SMEs? A Survey of German Bank Advisers, in: Credit and Capital Markets – Kredit und Kapital, vol. 55, iss. 1, 67-97, [online] https://doi.org/10.3790/ccm.55.1.67

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What Drives Financing Decisions of SMEs? A Survey of German Bank Advisers

Goeck, Marco | Walther, Ursula

Credit and Capital Markets – Kredit und Kapital, Vol. 55 (2022), Iss. 1 : pp. 67–97

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Marco Goeck, University of Koblenz-Landau.

Prof. Dr. Ursula Walther, Hochschule für Wirtschaft und Recht, Badensche Str. 52, 10825 Berlin.

References

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  146. Modigliani, F./Miller, M. H. (1965): The cost of capital, corporation finance, and the theory of investment: Reply. The American Economic Review, 524–527.  Google Scholar
  147. Molly, V./Uhlaner, L. M./De Massis, A./Laveren, E. (2019): Family-centered goals, family board representation, and debt financing, Small Business Economics 53(1), 269–286.  Google Scholar
  148. Moritz, A./Block, J./Heinz, A. (2016): Financing patterns of European SMEs – an empirical taxonomy, Venture Capital 18(2), 115–148.  Google Scholar
  149. Myers, S. C. (1984): The capital structure puzzle. The Journal of Finance 39(3), 574–592.  Google Scholar
  150. Myers, S. C./Majluf, S. M. (1984): Corporate financing and investment decisions when firms have information that investors do not have, Journal of Financial Economics 13(2), 187–221.  Google Scholar
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Abstract

This study explores companies’ financing decisions from a new perspective, those of the bank advisers, who are deeply involved in the decision processes, but are nevertheless outsiders. In our survey, corporate advisers of a large German bank report their perception of clients’ decisions. The survey covers both large companies and many SMEs. It confirms the relevance of company size, but also indicates strong heterogeneity within the SMEs. While some SMEs seem to resemble large companies, others differ noticeably. Our results confirm the relevance of strategy, management experience and decision makers’ personalities, but give little support for capital structure theories. The current change in German companies’ financing behavior towards more market-oriented instruments is clearly visible in the responses. The core motivations seem to be a desire for financial stability and flexibility. To secure this, companies tend to combine traditional bank financing with new instruments.